Tax Glossary
Clear definitions of essential tax terms and concepts used worldwide.
Progressive Tax
A tax system where the rate increases as the taxable amount rises.
Flat Tax
A tax system with a single rate applied to all income levels.
Marginal Tax Rate
The tax rate applied to the last dollar of income earned.
Effective Tax Rate
The average rate at which income is actually taxed.
Tax Bracket
A range of income taxed at a specific rate in a progressive system.
Capital Gains Tax
Tax on profits from selling assets like stocks, property, or investments.
Corporate Tax
Tax levied on business profits and corporate income.
Value-Added Tax (VAT)
A consumption tax applied at each stage of the supply chain.
Tax Treaty
An agreement between countries to prevent double taxation.
Double Taxation
When the same income is taxed by two different jurisdictions.
Tax Residency
The country where an individual is considered a resident for tax purposes.
Territorial Taxation
A system that only taxes income earned within the country's borders.
Withholding Tax
Tax deducted at source from payments like dividends, interest, or wages.
Tax Deduction
An expense that reduces taxable income before tax is calculated.
Tax Credit
A direct reduction in the amount of tax owed.
Foreign Tax Credit
A credit for taxes paid to a foreign government to prevent double taxation.
Transfer Pricing
Rules governing pricing of transactions between related entities across borders.
Wealth Tax
A tax on an individual's total net worth or assets.
Inheritance Tax
Tax levied on assets received from a deceased person.
Goods and Services Tax (GST)
A broad consumption tax similar to VAT, used in countries like Australia and India.
Short-Term Capital Gains
Profit from selling an asset held for a short period, often taxed at higher rates.
Long-Term Capital Gains
Profit from selling an asset held for a longer period, often taxed at preferential rates.
Tax-Loss Harvesting
Selling investments at a loss to offset capital gains and reduce tax owed.
Sales Tax
A consumption tax applied at the final point of sale to the end consumer.
Consumption Tax
A tax on spending on goods and services rather than on income.
Worldwide Taxation
A system that taxes residents or citizens on income earned anywhere in the world.
Dividend Tax
Tax levied on dividend income distributed to shareholders.